Tax Deductions for MLM/Direct Marketing Companies
Multi-Level or Direct Marketing has some of the most unique tax deductions. It is important to know and be aware of these tax deductions, so that you can lower your tax liability as much as possible. Here are some unique tax deductions to MLM/Direct Marketing companies:
Travel: Owners of MLM/Direct Marketing companies do a lot of traveling. They have conventions, recruiting seminars, product seminars, fairs, trade shows, demonstrations, etc. All the traveling to these places are tax deductible. Because of the nature of MLM/Direct Marketing business, Most owners of MLM/Direct Marketing companies are always sharing what they do with others. If you travel some place where you are telling others what you do, in hopes of recruiting them, this is also tax deductible.
Home Office: Because MLM/Direct Marketing owners don’t have an office in a building somewhere, they should have a home office. A home office needs to be a separate room in your home to do business and accounting. A percentage of utility bills, home owners insurance, property tax, mortgage interest, refinance fees, repairs and maintenance, cleaning supplies, office decor, etc. are deductible.
Trade Shows and Fairs: A lot of MLM/Direct Marketing companies do a lot of their business at trade shows and fairs. Any expense used to travel, setup and rent space at these events are completely tax deductible.
Product Use: Most MLM/Direct Marketing owners are required to buy and use the product that they sale when they first get started. This first use of the product is tax deductible.
For more tax deductions click here.
Business Entities and MLM/Direct Marketing Companies
There are two main reasons that an owner of a company wants to become an entity. They are: personal liability protection and tax advantages. To find out the pros and cons of the different business entities, click here.
What if your distributor won't pay an entity?
Some MLM/Direct Marketing companies are not aloud by the distributor to be a business entity. This does not have to stop you from receiving the tax advantages that a business entity can provided you. You can create a business entity and pay that entity for services. Your entity can do several things for your MLM/Direct Marketing company. Your MLM/Direct Marketing company can pay your business entity to hold demonstrations, package and deliver product, advertise and market, provide refreshments for meetings, provide and maintain a website and you can lease a vehicle from that business entity. This will provide a way for you to legally put your money into an entity and then pull it out of that entity at a tax reduced rate. Your distributor will be content because they are still paying your MLM/Direct Marketing company.
Click here for Corporation and LLC setup.
